Knapp v. Homeopathic Mut. Life Ins. Co. - 117 U.S. 411 (1886)


U.S. Supreme Court

Knapp v. Homeopathic Mut. Life Ins. Co., 117 U.S. 411 (1886)

Knapp v. Homeopathic Mutual Life Insurance Company

Submitted March 16, 1886

Decided April 5, 1886

117 U.S. 411

Syllabus

A policy of insurance, made to a wife on the life of her husband, contained this clause:

"This policy of insurance, after two annual premiums shall have been paid thereon, shall not be forfeited or become void by reason of the nonpayment of premiums, but the party insured shall be entitled to have it continued in force for a period to be determined as follows, to-wit, the net value of the policy when the premium becomes due and is not paid shall be ascertained according to the combined experience or actuaries' rate of mortality, with interest at four percent per annum. Four-fifths of such net value shall be considered as a net single premium of temporary insurance, and the term for which it will insure shall be determined according to the age of the party at the time of the lapse of premium, and the assumption of mortality and interest aforesaid, or, at his option, may receive a paid up policy for the full amount of premium paid, provided that unless this policy shall be surrendered and such paid up policy shall be applied for within ninety days after such nonpayment of premium as aforesaid, then this policy shall be void and of no effect."

Held that the words "paid up policy" in the proviso included an insurance for the amount of the original policy for a time computed according to its net value at the time of the failure to pay a premium, as well as an insurance for the term of the original policy for an amount computed according to the premiums paid, and that the wife was not entitled to have the policy continued or renewed in either form without surrendering it and applying for a new policy within ninety days after the nonpayment of a premium. Held also that the rights of the parties were not affected by the husband's having procured a cancellation of the original policy by fraudulently representing that the wife was dead.

This was an action brought March 19, 1878, by a citizen of Massachusetts against a corporation established by the laws of New York, upon a policy of insurance by which the company,

"in consideration of the representations made to them in the application for this policy, which is hereby made a part of this contract, and of the sum of $47.40 to them in hand paid by Abby Knapp, wife of Charles L. Knapp, and of the quarterly payment of a like amount on or before the sixteenth days of

Page 117 U. S. 412

July, October, January and April in every year during the continuance of this policy,"

insured the life of the husband, for the sole use of the wife, in the amount of $5,000 for the term of his natural life, beginning on April 16, 1869, payable at the office of the company in New York to her, if living, in thirty days after notice and proof of his death.

The application declared that

"neglect to pay the premium on or before the day it becomes due shall and will render the policy null and void, and forfeit all payments made thereon, unless otherwise specially provided for in the policy."

The policy contained the following clause:

"This policy of insurance, after two annual premiums shall have been paid thereon, shall not be forfeited or become void by reason of the nonpayment of premium; but the party insured shall be entitled to have it continued in force for a period to be determined as follows, to-wit: the net value of the policy when the premium becomes due and is not paid shall be ascertained according to the 'combined experience' or actuaries' rate of mortality, with interest at four percent per annum. Four-fifths of such net value shall be considered as a net single premium of temporary insurance, and the term for which it will insure shall be determined according to the age of the party at the time of the lapse of premium and the assumptions of mortality and interest aforesaid, or at his option may receive a paid up policy for the full amount of premium paid, provided that unless this policy shall be surrendered and such paid up policy shall be applied for within ninety days after such nonpayment as aforesaid, then this policy shall be void and of no effect."

A trial by jury having been duly waived, the circuit court found the following facts: the policy was issued April 14, 1869, in the City of New York, where the husband and wife then lived. It was taken out by the husband, who signed the application in the wife's name as her attorney. It was in the possession of the wife in 1871, and of the husband before and afterwards. The premiums were paid for several years, mostly by the husband, but one or two by the wife. She lived apart from her husband nearly all the time after February, 1872. On January 16, 1874, a premium became due and was not

Page 117 U. S. 413

paid. On February 26, 1874, the husband represented to the company that his wife was dead, the company believed the representation to be true, and he surrendered the policy, taking from the company $260 in money, and a new policy, concerning which the only evidence was that it had been forfeited before his death, which happened September 17, 1874. Very soon after his death, the wife sent to the company for information about the policy, and her agent was told by the company that it was forfeited. A considerable time after this, being advised that she might have some rights under the policy, she gave due notice and proof of loss, and more than thirty days afterwards brought this action to recover the full amount insured. The net value of the policy when the nonpayment of the premium occurred, if reckoned in the mode pointed out in the policy, would have been sufficient to continue it in force until after the death of the husband.

On these facts, the circuit Court ruled as matter of law that the policy was forfeited by the neglect to pay the premiums and to call for a paid up policy, and rendered judgment for the defendant, and allowed a bill of exceptions tendered by the plaintiff.



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